Download September 2016 Spending Brief

CENTER FOR SUSTAINABLE HEALTH SPENDING
Health Sector Economic IndicatorsSM
Insights from Monthly National Health Spending Data
Through July 2016
www.altarum.org
SPENDING BRIEF
September 9, 2016
Moderate 2016 health spending growth continues a slow downward trend
HIGHLIGHTS
At
$3.36 trillion (seasonally adjusted annual rate) national health
spending1 in July 2016 was 4.9% higher than health spending in June
2015.
The June 2016 nominal gross domestic product (GDP) growth over a
12-month period was 1.9%. (July data are not yet available.)
The health spending share of GDP was 18.2% in June, equal to its May
value, the all-time high for this series.
The health spending share of potential GDP (PGDP) was 17.7% in June
and is gradually approaching the health spending share of GDP as the
economy approaches full employment.2
Spending in July 2016, year over year, increased in all major categories.
Home health care grew the fastest, at 7.3%. Nursing home care grew at a
3.2% rate, the slowest among the major categories.
National Health Spending and GDP*
Jul 2014
Jul 2015
Jun 2016
GDP
17.50
18.05
18.44
Jul 2016
**
National Health Spending
3.04
3.21
3.36
3.36
Health Spending Share of GDP
17.4%
17.8%
18.2%
**
Health Spending Share of PGDP
16.9%
17.4%
17.7%
**
Health Spending
5.7%
5.5%
5.1%
4.9%
GDP
4.9%
3.2%
1.9%
**
Health Spending Minus GDP
0.8%
2.3%
3.2%
**
Health Spending Minus PGDP
2.0%
2.9%
2.2%
**
Growth from Prior 12 Months
Source: Altarum Institute monthly health spending estimates (see Methods on page 4). Monthly
GDP is from Macroeconomic Advisers and Altarum estimates. PGDP, defined as what GDP
would be at full employment, is from the quarterly Congressional Budget Office estimates,
converted to monthly by Altarum.
* Spending is in trillions of dollars at a seasonally adjusted annual rate.
HEALTH SPENDING
In July 2016, health spending held steady at a seasonally adjusted annual rate
(SAAR) of $3.36 trillion, equal its June value. June’s health spending
accounted for 18.2% of GDP, equal to the May value. (July data are not yet
available.) As a share of PGDP, June’s spending was at 17.7%, also equal to
its May reading. Year over year, health spending in July grew by 4.9%, down
from 5.1% in June (Exhibit 1). (Exhibits 7 and 8 show long-term
comparisons.)
Exhibit 1. Year-over-Year Growth Rates in Health Spending
Since the start of the recession in December 2007, real health
spending (using the GDP deflator) through June 2016 has increased by
25.4% (an annual rate of 2.7%). Real GDP, excluding health spending,
fell by more than 6% in mid-2009 and is now 6.9% above its December
2007 level. Including health care, real GDP in June was 10.0% above its
pre-recession level (Exhibit 2).
Exhibit 2. Health Spending and GDP: Cumulative
Percentage Change (Constant Dollars) Since December
2007
8.0%
30%
7.0%
25%
6.0%
20%
15%
5.0%
10%
4.0%
5%
3.0%
0%
2.0%
-5%
1.0%
-10%
0.0%
Jul
2014
Oct
2014
Jan
2015
Apr
2015
Jul
2015
Oct
2015
Jan
2016
Apr
2016
Jul
2016
Source: Altarum monthly national health spending estimates.
Note: This exhibit compares a given month’s health spending with that of the same month
from the previous year.
ALTARUM INSTITUTE Spending Brief #16-09: July 2016 data
Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun
2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 2014 2014 2015 2015 2016
HS
HS Estimate
GDP
GDP Minus HS
Source: “Health spending” (HS) consists of Altarum monthly estimates that match the
government’s official National Health Expenditure Accounts (NHEA). “HS estimates”
are Altarum estimates designed to be consistent with future NHEA values. Monthly
GDP is from Macroeconomic Advisers and Altarum estimates.
Note: Shading indicates the recession period.
© 2016 Altarum Institute. All rights reserved.
1
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CENTER FOR SUSTAINABLE HEALTH SPENDING
HEALTH CARE SPENDING BY CATEGORY
DISCUSSION
In July 2016:
Hospital spending was $1.07 trillion (SAAR) and represented
32% of total health spending (Exhibits 3 and 5).
Physician and clinical services spending was $673 billion, representing
20% of total health spending.
Prescription drug spending was $338 billion, 10% of total health
spending.
Nursing home care and home health care spending combined were
$262 billion, 8% of total health spending.
Spending on personal health care goods and services accounted for
85% of total health spending. Other major components include public
health, research, construction, and net cost of private insurance.
National health spending growth in July continued its gradual downward
trend over the past six months, declining from 5.6% (year over year) in
February to a July growth rate of 4.9%. On July 13, CMS published its
annual projections of national health expenditures.3 These projections
suggest that national health spending will grow in 2016 by 4.8%. Although
our July growth rate of 4.9% is approaching this value, the higher rates
earlier in the year mean that growth in the remaining 5 months of the year
will have to average 4.1% to reach the CMS projection, which seems
unlikely. Furthermore, as noted below, our estimates for the most recent
months are preliminary and will likely be revised upward in future spending
briefs.
At 18.2%, the health spending share of GDP remains at an all-time high,
though it has hovered between 18.1% and 18.2% since February 2016.
Whether this apparent leveling off continues will depend in part on
whether GDP growth improves in future months.
These results are based largely on the Bureau of Economic Analysis (BEA)
monthly spending data, including its most recent update released on
August 29. (Our estimates for 2015 and earlier are based on the official
estimates and projections of National Health Expenditures that are updated
annually by CMS.) The BEA data for the most recent four months are
preliminary and will be revised next month, when BEA incorporates data
from the U.S. Census Bureau’s Quarterly Services Survey (QSS) for the
second quarter, which was released on September 8. The QSS data indicate
that spending on health care services grew 6.9% from the second quarter of
2015 to the second quarter of 2016. In comparison, this spending brief
incorporates an estimate of 5.3% growth in services spending over the
same period, suggesting that there will be upward revisions to our services
data in next month’s brief.
Exhibit 3. Health Spending by Category, July 2016
Remaining
personal health
care
11%
Other health
spending
15%
Hospital
32%
Home health
care
3%
Nursing care
5%
Physician and
clinical services
20%
Prescription
drugs
10%
Dental services
4%
_____________________
1 Altarum’s
Source: Altarum monthly national health spending estimates.
Note: See Exhibit 5 for a complete list of spending categories.
Growth over the past 12 months: Home health care grew most rapidly
among the major categories at 7.3%, while dental services grew by 6.4%.
Nursing home care grew the slowest among major categories, at 3.2%. For
the preceding 12-month period ending July 2015, prescription drugs
showed the highest growth among the major categories, at 8.5% (Exhibits
4 and 6).
Exhibit 4. Health Spending Year-over-Year Growth for
Selected Categories
monthly estimates of national health spending are intended to approximate
the official NHEA produced annually by the Centers for Medicare & Medicaid Services
(CMS). Our estimates match NHEA values that are currently available through 2014 and
NHEA projections for 2015.
2 For further discussion of PGDP, see our blog at http://altarum.org/health-policyblog/the-case-for-tracking-health-spending-as-a-share-of-potential-gdp.
3 Keehan, S.P. et al (2016). National health expenditure projections, 2015-2025: economy,
prices, and aging expected to shape spending and enrollment. Health Affairs 35(8).
Available at
http://content.healthaffairs.org/content/early/2016/07/12/hlthaff.2016.0459.
Follow us on Twitter: @ALTARUM_CSHS
9.0%
8.0%
Altarum Institute is a 501(c)(3) nonprofit health care research and consulting
organization. Altarum integrates independent research and client-centered
consulting to deliver comprehensive, system-based solutions that improve health
and health care.
The Center for Sustainable Health Spending (CSHS) was launched in 2011 to
lead Altarum’s research on the cost growth trends and key drivers of U.S. health
spending and to formulate policy strategies to help bend the cost growth curve.
The Health Sector Economic IndicatorsSM reports are a monthly publication of
CSHS and provide an analysis of health spending, employment, and prices. For
more information, contact Charles Roehrig, PhD, at 734-302-4600 or
[email protected]. George Miller, PhD (principal author), Paul
Hughes-Cromwick, Ani Turner; and Matt Daly, PhD, contributed to this brief.
Media Contact: Ken Schwartz, 202-772-5062, [email protected]. For
more information, visit http://www.altarum.org/cshs.
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
Hospital care
Physician and clinical
services
Prescription Drugs
July 2016 annual growth
Nursing home care
Home health care
Dental services
July 2015 annual growth
Source: Altarum monthly national health spending estimates.
ALTARUM INSTITUTE Spending Brief #16-09: July 2016 data
© 2016 Altarum Institute. All rights reserved.
2
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CENTER FOR SUSTAINABLE HEALTH SPENDING
DETAILED HEALTH SPENDING
Exhibit 5. Monthly National Spending Estimates by Detailed Category
Jul 2013
Levels (in billions of dollars)
Jul 2014
Jul 2015
Jul 2016
GDP
National health spending
Personal health care
Hospital expenditures
Physician and clinical expenditures
Other professional services expenditures
Dental services expenditures
Other health, residential, and personal care expenditures
Home health care expenditures
Nursing care facilities and continuing care retirement communities
Prescription drug expenditures
Durable medical equipment expenditures
Nondurable medical products expenditures
Administration and net cost of health insurance expenditures
Public health activity
Research
Structures and equipment
National health spending share of GDP
$16,686.0
$2,877.3
$2,439.2
$930.4
$576.2
$79.8
$112.0
$144.8
$80.2
$149.3
$266.0
$45.0
$55.7
$209.3
$76.4
$46.3
$106.0
17.2%
$17,496.7
$3,040.1
$2,570.8
$976.9
$603.3
$85.1
$113.3
$150.5
$83.1
$155.9
$299.3
$46.1
$57.1
$236.5
$79.1
$45.5
$108.3
17.4%
$18,049.7
$3,207.1
$2,708.9
$1,019.9
$639.5
$89.6
$119.2
$158.5
$88.3
$161.7
$324.8
$48.3
$59.2
$254.9
$83.5
$46.2
$113.6
17.8%
National health spending share of PGDP
16.6%
16.9%
17.4%
**
Jul 2014
Jul 2015
Jul 2016
4.9%
5.7%
5.4%
5.0%
4.7%
6.7%
1.2%
4.0%
3.7%
4.4%
12.5%
2.6%
2.5%
13.0%
3.4%
-1.8%
2.2%
0.8%
2.0%
3.2%
5.5%
5.4%
4.4%
6.0%
5.2%
5.2%
5.3%
6.2%
3.7%
8.5%
4.8%
3.7%
7.8%
5.6%
1.6%
4.8%
2.3%
2.9%
**
4.9%
4.9%
4.6%
5.2%
7.4%
6.4%
4.9%
7.3%
3.2%
3.9%
7.5%
6.2%
5.2%
4.8%
2.5%
3.9%
**
**
**
$3,363.7
$2,842.6
$1,066.4
$673.0
$96.2
$126.8
$166.3
$94.7
$166.8
$337.6
$52.0
$62.9
$268.3
$87.5
$47.4
$117.9
**
Source: Altarum monthly national health spending estimates. The monthly GDP is from Macroeconomic Advisers and Altarum estimates.
Note: Spending is expressed in billions of dollars at a SAAR.
** Data are not yet available.
.
Exhibit 6. National Health Spending 12-Month Growth Rates by Detailed Category
Growth Rates
GDP
National health spending
Personal health care
Hospital expenditures
Physician and clinical expenditures
Other professional services expenditures
Dental services expenditures
Other health, residential, and personal care expenditures
Home health care expenditures
Nursing care facilities and continuing care retirement communities
Prescription drug expenditures
Durable medical equipment expenditures
Nondurable medical products expenditures
Administration and net cost of health insurance expenditures
Public health activity
Research
Structures and equipment
National health spending minus GDP
National health spending minus PGDP
Source: Computed from Exhibit 5.
Note: This exhibit compares monthly national health spending to that of the same month from the previous year.
** Data are not yet available.
ALTARUM INSTITUTE Spending Brief #16-09: July 2016 data
© 2016 Altarum Institute. All rights reserved.
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CENTER FOR SUSTAINABLE HEALTH SPENDING
TIME SERIES TRACKER
Exhibit 7. Year-over-Year Percentage Change in Spending and GDP
14%
12%
10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
1990
1995
Recession
2000
2005
National Health Spending Change
2010
GDP Change
2015
Potential GDP Change
Source: Altarum monthly national health spending estimates. Monthly GDP is from Macroeconomic Advisers and Altarum estimates.
Note: Lightly shaded bars denote recession periods.
Exhibit 8. Monthly Health Spending as a Percentage of Monthly GDP
19%
18%
17%
16%
15%
14%
13%
12%
11%
10%
1990
1995
2000
Health Share of GDP
2005
2010
2015
Health Share of Potential GDP
Source: Altarum monthly national health spending estimates. Monthly GDP is from Macroeconomic Advisers and Altarum estimates. PGDP is from the U.S. Congressional Budget
Office and has been converted to monthly estimates.
Note: Lightly shaded bars denote recession periods.
Methods. Altarum’s estimates are based on BEA monthly health spending (http://www.bea.gov/iTable/iTable.cfm?ReqID=12&step=1) and CMS
annual NHE estimates (1990–2014) and projections (2015 and 2016) (https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-andReports/NationalHealthExpendData/index.html). BEA spending categories are matched to NHEA components by using information presented in the
following: Hartman, M. B., Kornfeld, R. J., & Catlin, A. C. (2010, September). A reconciliation of health care expenditures in the National Health
Expenditures Accounts and in gross domestic product. Survey of Current Business, 90(9), 42–52. For all NHEA personal health care categories except “other
health, residential, and personal care,” monthly estimates are based on BEA spending adjusted to NHEA by using annual ratios. For the remaining
categories, national health spending estimates and projections are allocated across months by using a simple trend. Annual ratio adjustments through 2015
are based on NHEA actuals (through 2014), and projections (for 2015), and ensure that monthly estimates sum exactly to NHEA annual amounts. The
2015 ratios are used to adjust BEA spending for months in 2016.
ALTARUM INSTITUTE Spending Brief #16-09: July 2016 data
© 2016 Altarum Institute. All rights reserved.
4